Discover Your Retirement Number

September 22, 2021

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Denise and Chris Arand

Denise and Chris Arand

Executive Vice Presidents/Financial Strategists

2173 Salk Ave
#250
Carlsbad, CA 92008

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September 20, 2021

The Breakdown: Term vs. Perm

The Breakdown: Term vs. Perm

Navigating the world of life insurance can be a daunting task.

Even more daunting can be figuring out what policy is best for you. Let’s break down the differences between a couple of the more common life insurance policies, so you can focus on an even more daunting task – what your family’s going to have for dinner tonight!

Term Life Insurance. A Term life insurance policy covers an individual for a specific period of time – the most common term lengths being 10, 20, or 30 years. The main advantage of this type of policy is that it generally can cost the consumer less than a permanent insurance plan, because it might be shorter than a permanent policy.

The goal of a term policy is to pay the lowest premiums possible, because by the time the term expires, your family will no longer need the insurance. The primary thing to keep in mind is to choose a term length that covers the years you plan to work prior to retirement. This way, your family members (or beneficiaries) would be taken care of financially if something were to happen to you.

Permanent Life Insurance. Unlike term life insurance, permanent life insurance provides lifelong coverage, as long as you pay your premiums. This insurance policy – which also can be known as “universal” or “whole” – provides coverage for ongoing needs such as caring for family members, a spouse that needs coverage after retirement, or paying off any debts of the deceased.

Another great benefit a perm policy offers is cash accumulation. As premiums are paid over time, the money is allocated to an investment account from which the individual can borrow or withdraw the funds for emergencies, illness, retirement, or other unexpected needs. Because this policy provides lifelong coverage and access to cash in emergencies, most permanent policies are more expensive than term policies.

How Much Does the Average Consumer Need? Unless you have millions of dollars in assets and make over $250,000 a year, most of your insurance coverage needs may be met through a simple term policy. However, if you have a child that needs ongoing care due to illness or disability, if you need coverage for your retirement, or if you anticipate needing to cover emergency expenses, it may be in your best interest to purchase a permanent life insurance policy.

No matter where you are in life, you should consider purchasing some life insurance coverage. Many employers will actually offer this policy as part of their benefits package. If you are lucky enough to work for an employer who does this, take advantage of it, but be sure to examine the policy closely to make sure you’re getting the right amount of coverage. If you don’t work for a company that offers life insurance, don’t worry, you still may be able to get great coverage at a relatively inexpensive rate. Just make sure to do your research, consider your options, and make an informed decision for you and your family.

Now, what’s it going to be? Order a pizza or make breakfast for dinner? Choices, choices…

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August 25, 2021

3 Saving Strategies For College

3 Saving Strategies For College

In this day and age, it seems like college tuition is skyrocketing.

Students and parents are increasingly reliant on loans to cover the cost of higher education, often with devastating long-term results.¹

In this article we’ll cover three saving strategies to help you cover the cost of college without resorting to burdensome debt.

Strategy #1: Use “High-Yield” savings accounts. This strategy is simple—stash a portion of your income each month into a savings account. Then, when the time comes, use what you’ve saved to cover the costs of tuition.

Unfortunately, this strategy is riddled with shortcomings. The interest rates on “high yield” savings accounts are astonishingly low—you’d be hard pressed to find one at 1%.²

Even if you did, it wouldn’t be nearly enough. For example, if you had $3,000 saved for college in a savings account earning 1% interest per year, it would only grow to about $3,100 after four years—not enough to cover a whole semester’s tuition!

Even worse, inflation might increase the cost of tuition at a pace your savings couldn’t keep up with. Your money would actually lose value instead of gain it!

Fortunately, high-yield interest accounts are far from your only option…

Strategy #2: Consider traditional wealth building vehicles. That means mutual funds, Roth IRAs, savings bonds, indexed universal life insurance, and more.

The growth rates on these products are typically significantly higher than what you’d find in a high-yield savings account. You might even find products which allow for tax-free growth (the Roth IRA and IUL, for example).

But, typically, these vehicles have two critical weaknesses…

  1. They’re often designed for retirement. That means you’ll face fees and taxes if you tap into them before a certain age.

  2. They’re often subject to losses. A market upheaval could seriously impact your college savings.

Note that none of these vehicles are identical. They all have strengths and weaknesses. Consult with a licensed and qualified financial professional before you begin saving for college with any of these tools.

Strategy #3: Use education-specific saving vehicles. The classic example of these is the 529 plan.

The 529 is specifically designed for the purpose of saving and paying for education. That’s why it offers…

  • Tax advantages
  • Potential for compounding growth
  • Unlimited contributions

It’s a powerful tool for growing the wealth needed to help cover the rising costs of college.

The caveat with the 529 is that it’s subject to losses. It’s also very narrow in its usefulness—if your child decides not to pursue higher education, you’ll face a penalty to use the funds for something non-education related.

So which strategy should you choose? That’s something you and your financial professional will need to discuss. They can help you evaluate your current situation, your goals, and which strategy will help you close the gap between the two!

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Market performance is based on many factors and cannot be predicted. This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.


¹ “Student Loan Debt: 2020 Statistics and Outlook,” Daniel Kurt, Investopedia, Jul 27, 2021, https://www.investopedia.com/student-loan-debt-2019-statistics-and-outlook-4772007

² “Best high-yield savings accounts in August 2021,” Matthew Goldberg, Bankrate, Aug 25, 2021, https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/

August 23, 2021

Financial Essentials for Retiring Baby Boomers

Financial Essentials for Retiring Baby Boomers

Are Baby Boomers out of time for retirement planning?

At first glance, it might seem like they are. They’re currently aged 57-75, meaning a good portion have already retired!¹

And those who are still working have only a few precious years to create their retirement nest eggs and get their finances in order.

Perhaps you’re in that boat—or at least know someone who is. If so, this article is for you. It’s about some essential strategies retiring Baby Boomers can leverage to help create the futures they desire.

Eliminate your debt. The first step is getting rid of your debt. After all, it’s not optional in retirement—you’ll need every penny to fund the lifestyle you want.

That means two things…

  1. Don’t take on any new debt. No new houses, boats, cars, or credit card funded toys.
  2. Use a debt snowball (or avalanche) to eliminate existing debts.

That means focusing all of your financial resources on a single debt at a time, knocking out either the smallest balance or highest interest debt.

Eliminating, or at least reducing, your debt can help create financial headroom for you in retirement. It frees up more cash flow for you to spend on your lifestyle and on preparing for potential emergencies.

Maximize social security benefits. Delay Social Security as long as possible (or until age 70). Delaying Social Security increases your monthly payments, so it’s a simple way to maximize your benefit.

For example, if you started collecting Social Security at age 66, you would be entitled to 100% of your social security benefit. At 67, it increases to 108%, and by 70 it increases 132%. That can make a huge difference towards living your dream retirement lifestyle.

Check out the Social Security Administration’s website to learn more.

Protect your wealth and health with long-term care (LTC) coverage. The next step is to protect your assets from the burden of LTC. It’s a challenge 7 out of 10 retirees will have to overcome, and it can be costly—without insurance, it can cost anywhere between $20,000 and $100,000. That’s a significant chunk of your retirement wealth!²

The standard strategy for covering the cost of LTC is LTC insurance. It pays for expenses like nursing homes, caretakers, and adult daycares.

But it can be pricey, especially as you grow older—a couple, age 55, can expect to pay $2,080 annually combined, while a 65 year old couple will pay closer to $3,750.³

The takeaway? If you don’t have LTC coverage, get it ASAP. The longer you wait, the more cost—and risk—you potentially expose yourself to.

Pro-tip: If you have a permanent life insurance policy, you may be able to add a LTC rider to your coverage. Meet with a licensed and qualified financial professional to see if this option is available for you!

Review your income potential with a financial professional. The final step on your path to retirement is reviewing your income options. You want to strike a balance between maximizing your sources of cash flow and keeping control over your retirement plan.

Many retirees lean heavily on two primary income opportunities: Social security and withdrawals from their retirement savings accounts.

And that’s where a financial professional can help.

They can help you review your current retirement lifestyle goals, savings, and potential income. If there’s a gap, they can help come up with strategies to close it.

You’ve worked hard and made sacrifices—now it’s time to reap the rewards of all that elbow grease. Which of the essentials in this article do you need to tackle first?

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¹ “Boomers, Gen X, Gen Y, Gen Z, and Gen A Explained,” Kasasa, Jul 6, 2021, https://www.kasasa.com/articles/generations/gen-x-gen-y-gen-z

²”Long-term care insurance cost: Everything you need to know,” MarketWatch, Feb 19, 2021, https://www.marketwatch.com/story/long-term-care-insurance-cost-everything-you-need-to-know-01613767329

³ “Long-Term Care Insurance Facts - Data - Statistics - 2021 Reports,” American Association for Long-Term Care Insurance, https://www.aaltci.org/long-term-care-insurance/learning-center/ltcfacts-2021.php

August 16, 2021

Financial Moves to Improve Your Mental Health

Financial Moves to Improve Your Mental Health

Can wise money moves help improve your mental health, decrease your stress, and boost your peace of mind? Absolutely.

It’s easy to see why. A lot of stress comes from worrying about the future, as well as problems that might seem small but are stressful in practice (such as getting stuck with a $400 car repair bill because your brakes went out).

How much better would it feel if you could stop stressing about money? How much less anxiety would you experience if your retirement savings were on track? And how much more secure would you feel, knowing that should an emergency arise, you have the resources to handle it?

With that end in mind, here are simple financial moves you can make to help improve your mental health!

Create a financial vision statement. Whether you use a financial professional or do it on your own, creating a financial vision statement is the first step to improving your quality of life with personal finance.

What’s a “vision statement?” It’s a one or two sentence description of where you want your money to take you in the future.

Why does it help your mental health? For starters, it gives you a goal to strive towards, and goals tend to increase mental resilience.¹

It also may help reduce uncertainty and ambiguity about the future. When your financial vision statement is clear and complete, your next actions may become clear and obvious.

But while it may seem simple on paper, it can feel overwhelming in practice. Try this process to help take the stress out of creating your vision statement…

Create a list of things you value. That could be family, adventure, stability, comfort, and more.

Write out what a future full of your values would look like. This gives you a more concrete—and inspiring—vision of your goals.

Describe how money can make your vision a reality. This final piece is your financial vision statement. It’s how much money you’ll need to enjoy the lifestyle you want in the future.

Save up an emergency fund. Juggling a paycheck, credit card bills, student loans and other debt repayment, rent, and groceries is stressful.

Unexpected—and expensive—emergencies can make things even harder.

But being prepared helps! Having an emergency fund means that when something goes wrong, you’ll have cash on hand to help cover it.

In general, aim to save 3-6 months’ worth of income and keep it easily accessible. Then, when an emergency strikes, simply reach into your emergency fund to help cover the costs.

Will it totally eliminate the stress of emergencies? Probably not. But it can mitigate the financial anxiety that can loom over you if you’re not prepared.

Meet with a financial professional. Nothing reduces your stress levels quite like knowing your finances are in good hands. That’s where a licensed and qualified financial professional can help.

They can help you develop strategies for reaching your goals, identify obstacles early on, and refine your financial vision statement.

Plus, having someone you can talk to about money can make your finances far less intimidating and stressful. Find a professional who you’re comfortable with and who’s knowledgeable, and start cultivating your relationship. It may be one of the best investments you make!

If you’re feeling stressed about money, know that you’re not alone. And the good news is that you can do something about it. Try these simple steps, and see how you feel!

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¹ “Goal setting,” healthdirect, https://www.healthdirect.gov.au/goal-setting

August 11, 2021

Saving Money With Credit Cards: The Ultimate Guide

Saving Money With Credit Cards: The Ultimate Guide

Credit cards are one of the most useful tools for saving money.

That may seem counter-intuitive. In fact, if you’re struggling with credit card debt, it might seem like an all out fantasy!

But if you have your credit cards under control, they can offer significant opportunities to save money.

Here’s your strategy guide for saving money with credit cards.

Eliminate your credit card debt. The simple truth is that credit card debt can derail your financial strategy. No matter how advantageous credit card rewards seem, they won’t offset the high interest rates that most cards feature.

So before you start leveraging the benefits a card can offer, take steps to eliminate your credit card debt completely.

The two most common strategies are the “debt snowball” and the “debt avalanche.”

Debt Snowball: Make only minimum payments on your other cards, and focus all of your financial firepower on your smallest balance. Once that’s gone, move on to the next smallest. Repeat until your debt is gone.

Debt Avalanche: Make only minimum payments on your other cards, and focus all of your financial firepower on the balance with the highest interest rate. Once that’s gone, move on to the next highest. Repeat until your debt is gone.

Another strategy is opening a new card with a 0% introductory APR. Then, use your new card to pay off your old card with no interest. This is called a balance transfer, and there are specialized cards with benefits tailored for this strategy. Check out this Nerdwallet article for a few options! (Note: Make sure you understand any fees that may be charged for a transfer.)

Build your credit score. It’s no joke—the higher your credit score, the greater the rewards you may earn. To help maximize your savings with a card, start building your credit score ASAP.

A simple step towards increasing your score is automating all of your loan payments. You can do this with your credit card, mortgages, and car loans. Once your credit crosses a certain threshold, look for cards with greater benefits. You might be surprised by the difference your score makes!

Choose benefits that align with your lifestyle. DO NOT get a travel card and then plan four international vacations to “maximize your benefits.”

Instead, choose a card that rewards you for your current habits, behaviors, and the way you live your life. It’s a chance to get something back for going about your daily routine!

Travel frequently for work or lifestyle? Consider a card that rewards you for flying or that waives foreign transaction fees.

Loyal to certain brands and stores? Look for cards that offer points for shopping with your favorites.

Above all, remember that credit cards ARE NOT FREE MONEY. The more disciplined you are with your credit card usage, the more you stand to benefit from the rewards.

Ask a financial professional about how you can leverage credit cards for your advantage. They can help you understand your financial position and develop a strategy to maximize your benefits.

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August 4, 2021

Should You Pay Off Your Mortgage Early?

Should You Pay Off Your Mortgage Early?

On the surface, paying off your mortgage seems like a no-brainer.

It’s become a staple of personal finance advice that everyone should eliminate their mortgage ASAP.

But here’s the truth—there are some drawbacks to eliminating your mortgage quickly. Read on for the pros and cons of paying off your mortgage early.

The pros of paying off your mortgage early. Your mortgage can be a serious drain on your financial resources. Those monthly payments can hamper your ability to save, build wealth, and enjoy the lifestyle you desire. It makes sense that the sooner you eliminate those payments, the sooner you’ll have the cash flow to make your dreams a reality.

You might also save a significant amount of money in interest by paying off your mortgage early. The less time your mortgage accrues interest, the less you’ll pay overall.

Perhaps most importantly, eliminating your mortgage creates peace of mind. So long as you’re paying off a mortgage, you’ll always run the risk of defaulting and losing your home. Owning your house outright can greatly reduce this danger and the stress that comes with it.

The cons of paying off your mortgage early. But eliminating your mortgage is not necessarily an unalloyed good. There are a few downsides to consider, too.

What if, instead of devoting your financial resources towards your mortgage, you saved them at a high interest rate?

There’s a chance you would actually walk away with more wealth. That’s because the sooner your money starts compounding interest, the greater potential it has to grow.

When you should and shouldn’t pay off your mortgage early. Paying off your mortgage early might be viable if your mortgage makes up a small fraction of your monthly expenses. So long as it doesn’t interfere with your other savings goals.

However, always consult with a financial advisor before you make this decision. They can determine if eliminating your mortgage quickly will derail your wealth building strategy!

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August 2, 2021

5 Warning Signs That You Need a Financial Professional

5 Warning Signs That You Need a Financial Professional

With the cost of living on the rise, many people are struggling to make ends meet.

It’s important to know when you’re in over your head and need some help from a professional. Here are five warning signs that could indicate it’s time for some financial advice.

You’re not sure if you can afford to retire. The first warning sign that you may need financial advice is when you’re not sure if you can afford to retire when you want to. Retirement is the centerpiece of many financial strategies, so if you feel like you’re short here, it’s a serious red flag.

A financial professional can help you…

  • Determine how much wealth you’ll need to retire comfortably
  • Create a plan that can help you reach your goal

So if there’s any uncertainty about your financial future, schedule a meeting ASAP!

You have a lot of credit card debt and don’t know how to pay it off. When credit card balances start piling up, it can quickly become overwhelming. If left unchecked, your credit card debt can drain your cash flow and slow your progress towards financial goals. A financial professional can help you figure out a strategy to attack debt to help mitigate damage to your finances and avoid potentially lowering your credit score.

You struggle to afford necessities. Sometimes, life throws us curveballs and our budget gets stretched to the max. If you’re struggling to pay rent or put food on the table, it’s time to consider getting some help. Most people are at their best when they’re working towards goals. That’s exactly what a financial professional is here to offer—guidance so you can be the best version of yourself and accomplish your dreams.

You’ve been living paycheck-to-paycheck. If you have a lot of expenses but no savings, it’s likely that your financial strategy is lacking one or more key components. That’s because living paycheck-to-paycheck hampers your ability to build wealth—all of your cash is going straight from your wallet into someone else’s pocket. A financial professional can help you discover areas to dial back your spending and start saving.

You feel like your savings are shrinking, not growing. Have you started to rely on your retirement savings, today? If so, contact a financial professional immediately. They can help you discover the roots of your financial condition and put a financial strategy in place to help protect your nest egg for the future.

It’s important that you know when you need help. These five warning signs could indicate your financial situation is in dire straits and requires professional help. If any one of these apply to you or if you’re just not sure if they do, contact me today!

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July 28, 2021

The Difference 15 Years Can Make

The Difference 15 Years Can Make

Choosing between a 15-year and 30-year mortgage is one of the most important financial decisions you’ll make.

The answer which is better for you depends on your personal situation, but there are definite pros and cons to each. In this article we’ll take a look at both types of mortgages and see what they offer along with their drawbacks so that you can make a more informed decision about which mortgage works best for you.

The 15-Year Mortgage. As the name suggests, a 15-year mortgage has payments spread over 15 years, as opposed to 30 years for the standard loan. That has two practical implications…

  • Your monthly payments will probably be higher
  • The total cost of the home will likely be lower

Those might seem contradictory. But the math is simple.

Let’s say your monthly payment for a 15-year mortgage is $1,000, while for a 30-year mortgage your payment is $750.

For the 15-year mortgage, you’ll pay $180,000 over the lifetime of your loan. For the 30-year loan, that number is $270,000, a $90,000 difference! So if you can afford the higher monthly payments, a 15-year mortgage might save you a substantial amount of cash over the long-term.

The 30-Year Mortgage. But make no mistake—the 30-year mortgage has distinct advantages of its own. How? It often offers lower monthly payments, which frees up your cash flow. That extra money can go towards saving, financial protection, and building wealth.

Not every family will have the financial resources to afford potentially higher monthly payments with a 15-year mortgage. Depending on your financial situation, a 30-year mortgage may be a better option.

The bottom line? The mortgage you choose can impact your financial security now and in the future. That’s why it’s best to consult with a financial professional before buying a home. They’ll have the knowledge you need to make an informed decision that aligns with your long-term goals.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies that may be available to you. Any examples used in this article are hypothetical. Before taking out any loan or enacting a funding strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

July 26, 2021

6 Viable Passive Income Sources

6 Viable Passive Income Sources

The idea of having a passive income is something that many people dream about.

That’s because it means you can earn money above and beyond physical hours of work that you might put in! And there are plenty of ways to establish a passive income. In this article, we’ll discuss 6 different sources of passive income and how you can take advantage of each.

1. Rental income. This could come from renting out a room in your home, a basement, or a property you’ve purchased. The income from your tenants can help cover maintenance costs and provide you with a reliable, consistent source of income. It’s a simple, classic cash flow creator.

But it’s not perfect. Buying properties may require you to borrow money, which can create risk. Furthermore, managing unruly tenants can be time-consuming, taking the “passive” out of passive income.

2. Affiliate marketing. What if you could get paid to sell someone else’s products? It doesn’t get much more passive than that. Affiliate marketing is where you simply place a link to a product on your social media feed, YouTube video, blog, or website. You get a cut of the profit every time that link leads to a sale.

Just know that affiliate marketing works best for those with some measure of online following—more eyes on your affiliate link means more potential clicks!

3. Create ebooks and courses. Online educational content isn’t the purest form of passive income—it requires upfront work to research and create. But once they’re published, they can provide regular extra cash. Just be sure that you’re creating content on a subject matter you’re familiar with!

4. Blogging. Overwhelmed by writing an entire eBook? Start with a blog! It’s a simple way to get your ideas down on (digital) paper AND generate some ad revenue at the same time. Just remember, blogging may have a long lead time before it becomes profitable.

5. Peer-to-peer lending. Investing in loans has been around for ages—and with peer-to-peer platforms like Lending Club or Prosper, investing can be done quickly online. It’s a simple, quick way to earn interest on the fly.

But be warned—putting money into this type of service could be a substantial risk. There’s no guarantee that your creditors will repay their debts, which could leave you out to dry. So while it’s a viable option for passive income, it may not be 100% safe.

6. Start flipping! And I don’t mean doing gymnastics in the park (though that could earn you some cash—maybe). Instead, hit up a local thrift store. If you see a find that catches your eye, check to see how much you could sell it for on eBay or Craigslist. You might be surprised by the price difference! Buying at the thrift store and selling online could result in a serious profit.

This isn’t a fully passive income—it requires some investment and time searching and shopping for items. But it’s far more fun and feasible for most than real estate or writing an eBook.

So what are you waiting for? If you have the skills, time, and patience for it—then go for it! You might be surprised by how much you can earn with minimal effort.

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July 14, 2021

Is Refinancing Worth It?

Is Refinancing Worth It?

What do you think of when you hear the word “refinancing?”

If you’re like most people, your first thought might be that it has something to do with a mortgage. And you’re not wrong! However, refinancing can apply to many different types and forms of loans. In this article we will explore what refinancing is, how it works, and when it can work to your advantage.

What is refinancing?

Refinancing is the process of transferring all or part of an existing loan from one loan to another. This is done in order to achieve a…

  • Lower interest rate
  • Lower monthly payments
  • More favorable repayment period
  • Or all of the above

Let’s consider an example. Say you have a $10,000 loan with a 5% interest rate and a 10-year term. You’ll pay $106 every month to service the debt, and over $12,000 in total once interest is included.

But you think you can do better! You find someone else who’s willing to loan you $10,000 at a 2.5% interest rate over a 10-year term. You’d save more than $1,000 in interest and pay less every month. That’s a far better deal.

So, you would borrow money from your new creditor and use that sum to eliminate your existing loan. You’ve used another loan to decrease your interest burden and increase your cash flow. That’s the power of refinancing in a nutshell. It’s often worth the effort if you can decrease your interest rate without increasing your term.

But it may not be a silver bullet for your debt.

Refinancing only works if you can score a new loan with a more favorable contract. There may be times when interest rates are high and finding lower rates simply isn’t possible. Even then, a lower interest rate may not offset the costs of a longer loan term.

That’s why it’s always best to work with a financial professional before you refinance any loan. Their expertise can help you determine whether refinancing will help or hinder your progress towards your financial goals.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies that may be available to you. Any examples used are hypothetical. Before taking out any loan or enacting a funding strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

June 23, 2021

Begin Your Budget With 5 Easy Steps

Begin Your Budget With 5 Easy Steps

A budget is a powerful tool.

No matter how big or small, it gives you the insight to track your money and plan your future. So here’s a beginner’s guide to kick-start your budget and help take control of your paycheck!

Establish simple objectives <br> Come up with at least one simple goal for your budget. It could be anything from saving for retirement to buying a car to paying down student debt. Establishing an objective gives you a goal to shoot for, and helps motivate you to stick to the plan.

Figure out how much you make <br> Now it’s time to figure out how much money you actually make. This might be as easy as looking at your past few paychecks. However, don’t forget to include things like your side hustle, rent from properties, or cash from your online store. Try averaging your total income from the past six months and use that as your starting point for your budget.

Figure out how much you spend <br> Start by splitting your spending into essential (non-discretionary) and unessential (discretionary) spending categories. The first category should cover things like rent, groceries, utilities, and debt payments. Unessential spending would be eating at restaurants, seeing a movie, hobbies, and sporting events.

How much is leftover? <br> Now subtract your total spending from your income. A positive number means you’re making more than you’re spending, giving you a foundation for saving and eventually building wealth. You still might need to cut back in a few areas to meet your goals, but it’s at least a good start.

If you come up negative, you’ll need to slash your spending. Start with your unessential spending and see where you can dial back. If things aren’t looking good, you may need to consider looking for a lower rent apartment, renegotiating loans, or picking up a side hustle.

Be consistent! <br> The worst thing you can do is start a budget and then abandon it. Make no mistake, seeing some out-of-whack numbers on a spreadsheet can be discouraging. But sticking to a budget is key to achieving your goals. Make a habit of reviewing your budget regularly and checking your progress. That alone might be enough motivation to keep it up!

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June 14, 2021

Getting a Degree of Financial Security

Getting a Degree of Financial Security

The financial advantage gap between having a college degree and just having a high school diploma is widening!

As of 2019, the average college graduate earned 75% more than the average high school graduate.¹ When you crunch the numbers, it’s actually a more robust investment than stocks or bonds.

This income difference is making saving for retirement difficult for millennials without a college degree. According to the Young Invincibles’ 2017 ‘Financial Health of Young America’ study, millennial college grads – even with roadblocks like student debt – have saved nearly $21,000 for retirement.² That’s quite a lot more as compared to the amount saved by those with a high school diploma only: under $8,000.

However, a college grad may encounter a different type of retirement savings roadblock than a reduced income – student loan debt. But the numbers show that even with student loan debt, the advantages of having a college degree and a solid financial strategy outweigh the retirement saving power of not having a college degree.

Here’s an issue plaguing both groups: more than two-thirds of all millennial workers surveyed do not have a specific retirement plan in place at all.³

Regardless of your level of education or your level of income, you can save for your retirement – and take steps toward your financial independence. Or maybe even finance a college education for yourself or a loved one down the road.

The first step to making the most of what you do have is meeting with a financial advisor who can help put you on the path to a solid financial strategy. Contact me today. Let’s get your money working for you.

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¹ “College grads earn $30,000 a year more than people with just a high school degree,” Anna Bahney, CNN, Jun 6, 2019, https://www.cnn.com/2019/06/06/success/college-worth-it/index.html

² “Financial Health of Young America: Measuring Generational Declines between Baby Boomers & Millennials,” Tom Allison, Young Invincibles, Jan 2017, http://younginvincibles.org/wp-content/uploads/2017/04/FHYA-Final2017-1-1.pdf

³ “Retirement Plan Access and Participation Across Generations,” Pew, Feb 15, 2017, http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/02/retirement-plan-access-and-participation-across-generations

May 26, 2021

The Better Choice: Federal or Private Loans for College

The Better Choice: Federal or Private Loans for College

Education can be one of the best investments you can make in your future.

Those with a bachelor’s degree earn, on average, almost $1 million more over their lifetime than those with just a high school diploma. And a person who gets a master’s degree can earn more money than someone with a bachelor’s degree!¹

But how should you pay for higher education? You may not have enough cash on hand to afford school. That means you’ll need student loans. That begs another question—should you get a federal or a private loan? There are many factors that go into answering this question. Let’s break down some pros and cons for both federal and private loans so you can decide which route is right for you.

Federal loans come straight from Uncle Sam. It all begins with filling out a FAFSA form. This form determines your eligibility for loans, grants, and work-study programs.

Federal student loan rates are typically lower than for private lenders. Federal loans also offer more flexible repayment options—you can make payments as a percentage of income or defer them until after school ends. You may also qualify for relief if you default on your loans. In general, a federal loan can be a good choice for many students, whether they’re pursuing a bachelor’s or master’s degree.

But remember, there are potential limitations to how much the federal government will lend you. Private loans may be needed to fill in the gaps. They typically charge higher interest rates and have stricter payment options. But they can sometimes be refinanced for better terms.

So if you need loans to afford your education, opt for federal loans first. Then, use private loans to cover the rest, refinancing as needed.

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¹ “The College Payoff: Education, Occupations, Lifetime Earnings,” Georgetown University Center on Education and the Workforce, 2011 https://cew.georgetown.edu/cew-reports/the-college-payoff/

² “Federal Versus Private Loans,” Federal Student Aid, https://studentaid.gov/understand-aid/types/loans/federal-vs-private

May 24, 2021

Why Families Buy Term Life Insurance

Why Families Buy Term Life Insurance

Why does term life insurance seem to be so common among your friends and family?

For many, it’s simply the most affordable strategy for securing life insurance. And that means it can provide critical financial protection for many different situations. Here are a few of the most common reasons families choose term life insurance.

The power of term life insurance is that it’s typical affordable. It provides a death benefit for a limited term, typically 20-30 years, which means you can often purchase more protection at a lower price than other types of policies. As long as your protection lasts while you have financial dependents, you’re covered.

But there are more pragmatic reasons why families buy term life insurance. For many, it serves as a source of income replacement. When a breadwinner passes away, the income they provide is gone. That means a family might find themselves with a serious cash flow deficiency in addition to the tragic loss. The death benefit can replace the lost income.

A family might also need to purchase life insurance when they have dependents, such as college-aged kids with high educational expenses. If a family has dependents and no life insurance, the burden of funding higher education falls on the family, who are down an income. With term coverage in place, they have the financial power to help cover those bills with confidence.

Term life insurance can also be invaluable for families with high debt obligations. Because it’s often so affordable, term life insurance may provide significant coverage without diverting financial resources away from getting out of debt. And, if the policyholder passes away before the debt is eliminated, the death benefit can also go towards finishing off loans.

Finally, term life insurance can be used to cover the costs of funeral expenses. Families who don’t have any other form of coverage for these out-of-pocket bills often need extra cash to cover the costs of burial. Term life insurance is a simple way to pay for the funeral the family needs.

In conclusion, term life insurance can be a great way to cover the costs of many big ticket items and expenses at a reasonable cost. Would that be a good fit for your family? Contact me, and we can explore what it would look like for you!

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May 19, 2021

The Advantages of Survivorship Insurance

The Advantages of Survivorship Insurance

A survivorship policy pays out only after two people pass away.

Why does that matter? For many families, it doesn’t. They need more traditional forms of life insurance that protect income for their spouses and children.

But there are specific situations where survivorship insurance might be critical for your legacy. Read on for the advantages of survivorship insurance!

First, survivorship insurance can be an invaluable tool for estate planning. If one spouse dies, they can pass their assets to their spouse without facing federal estate taxes.¹ Not so for wealth left to future generations! For some couples with substantial assets to pass on to children, survivorship can leave a sizable death benefit that can offset the cost of estate taxes.²

If this strategy appeals to you, reach out to an attorney and a financial professional. You’ll need their help to get your estate in order and navigate your state’s tax system.

Second, survivorship insurance can cover ailing or elderly couples. As a rule of thumb, survivorship insurance is a good option for those who don’t qualify for term or permanent life insurance due to health or age. That’s because the rates are based on two life expectancies, potentially lowering rates and increasing your likelihood of qualifying.³ This is especially useful if the couple has children who are still dependents or will need special care.

In conclusion, survivorship insurance can be a powerful tool for specific people in specific situations. That’s why it’s best to collaborate with legal and financial professionals to make a decision that will be right for you and your family.

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¹ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

² “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

³ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

May 17, 2021

A Matter of Life and Debt

A Matter of Life and Debt

You might never have thought about this before, but how are debt and life insurance connected?

Well, the answer is very simple. Debt is one of the largest financial struggles in society today—total consumer debt has grown to a staggering $14.9 trillion as of 2020.¹ That represents a staggering financial burden on Americans throughout the country.

But what happens if someone in debt passes away? The debt doesn’t just vanish. The estate of the deceased is often responsible for repaying creditors.² That means a family, already down an income, has to cope with the stress of managing debt.

That’s where life insurance can help.

Life insurance pays out a lump sum in the event of death. The money can help family members repay debt, care for children or other dependents, and provide financial security to those left behind.

So how much life insurance do you need? That’s something only you can answer for your own household. Typically, experts recommend 10X your annual income to provide a sufficient financial cushion for your family. But, depending on your level of debt or the particular needs of your spouse and children, you may require more coverage!

Life insurance could be critical for the financial well-being of your family if you’re carrying debt. It might provide the cash they need to pay your creditors and start building a new future.

If you’re looking for life insurance, contact me. We can estimate the amount of protection that’s right for your family!

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May 12, 2021

A Beginners Guide to Saving and Shredding Documents

A Beginners Guide to Saving and Shredding Documents

It’s time to manage all those papers that are taking up space in your filing cabinets!

But how? Which documents should you preserve? Which ones should you shred? Here are 11 helpful tips on what to do with tax documents, legal documents, and property records.

Documents to keep <br> At the top of this list? Estate planning documents. Your will, your living trust, and any final instructions should be carefully labeled, stored, and protected. Your life insurance policy should be safeguarded as well.

Records of your loans should be preserved. That includes for your mortgage, car and student loans. Technically, you can shred these once they’re paid off, but it’s wise to keep them around permanently. Someday you may have to prove you’ve actually paid off these debts.

Tax returns <br> Here’s a trick—keep tax returns for at least 7 years. Why? Because there’s a 6 year window for the IRS to challenge your return if they suspect you’ve underreported your income.¹ Keep your records around to prove that you’ve been performing your civic duty by properly reporting your income.

(Check your state’s government website to determine exactly how long you’re supposed to keep state tax returns.)

Property records <br> Keep all of your records pertaining to…

  • Your ownership of your house
  • The legal documents for buying your house
  • Commissions to your real estate agent
  • Major home improvements

Save these documents for a minimum of 6 years after you move out of your home. If you’re a renter, keep all of your records until you’ve moved out. Then, fire up your shredder and get to work!

Speaking of your shredder…

Annual documents to destroy <br> Every year, you can shred paycheck stubs and bank records. Just be sure of two things…

First, make sure that you’re not shredding anything that might belong in your tax records.

Second, be sure that you’ve reviewed your finances with a professional who will know which documents may need preserving.

Once you’ve done that, it’s fine to feed your shredder at your discretion!

Credit card receipts, statements and bills <br> Once you’ve checked your monthly statement against your bank records and receipts, you’re free to shred them. You may want to hold on to receipts for large purchases until the item breaks or you get rid of it.

When in doubt, do some research! It’s better than tossing out something important. And schedule an annual review with a licensed and qualified financial professional. They can help you discern which documents you need and which ones can be destroyed.

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¹ “Save or Shred: How Long You Should Keep Financial Documents,” FINRA, Jan 27, 2017, https://www.finra.org/investors/insights/save-or-shred-how-long-you-should-keep-financial-documents

April 14, 2021

The Time Value of Money and College

The Time Value of Money and College

College is one of the most expensive things that you can spend your money on, but it might not always be a good investment.

College graduates make much more than high school graduates over their lifetimes.¹ Some people think this means going to college is worth the cost because they’ll be able to pay off the loans with their higher salaries after graduation. But as you’ll see in this article, there’s another critical factor you should consider before going off to school.

Which career path will empower you to start saving sooner? The longer your money can accrue compound interest, the more it can grow. Working an extra four years instead of attending school could result in retiring with more. Let’s consider two hypotheticals that illustrate this point…

Let’s say you land a job straight out of high school at age 18 earning $35,000 total annual salary. You’re able to save 15% of your income in an account where the interest is compounded monthly at 9%. Assuming you work until 67, or 49 years, and consistently save the same amount each month over that time period at the same interest rate, you would retire with almost $4 million!

What if instead you attend college and graduate after 4 years? You land a job that pays $60,000 annually and are able to save 15% of your income. If you also retire at 67 after 45 years of work, saving 15% every month, you’ll retire with $4.7 million. That’s almost $700,000 more than the non-graduate!

But what if student loans prevent you from saving for 5 years after graduation? You’d retire with $3 million. In this hypothetical scenario, losing 9 years of saving results in a college graduate actually retiring with less than someone who diligently works and saves right out of high school.

The takeaway isn’t that you shouldn’t attend college. It’s that you should carefully weigh the costs of higher education. Is there a career path you could take right out of high school that would have you saving right away? Will your degree land you deep in debt and behind the 8-ball for building wealth? Or do the benefits of the degree substantially outweigh the costs? Don’t attend a college just because it’s what your peers are doing. Consider your passions, weigh the benefits, and calculate the costs before you make your decision!

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Any examples used in this article are hypothetical. Before investing, enacting a savings or retirement strategy, or taking on any loans or debt, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

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“The College Payoff,” Georgetown University, https://cew.georgetown.edu/cew-reports/the-college-payoff/

April 12, 2021

Home Buying for Couples: A Starter Guide

Home Buying for Couples: A Starter Guide

Buying your first home is an exciting, yet daunting process.

You and your significant other already have a lot on your plate in planning this huge purchase—from deciding how much house you need to fitting it all into a budget. Read on for some tips that will help ease the process of buying a house as well as help you save money in the long run!

Evaluate your financial situation before you start house hunting. It’s important to know what kind of mortgage payment is feasible for the income in a household. You’ll also have to contend with hidden housing costs like property taxes, renovations, and repairs. Calculate your total income, and then subtract your current expenses. That’s how much you have at your disposal to handle the costs of homeownership.

Improve your credit score. If you’re a first-time homebuyer, your credit score is important—it can profoundly affect your ability to get approved for loans and mortgages! The higher that number goes up, the easier it may become to get approval from lenders. You can help yourself out by paying off any outstanding debt balances such as student loan payments, medical bills, and credit card debt before going house hunting.

Start saving for a downpayment. As a rule of thumb, you’ll want to put down at least 20% of the home’s purchase price. This can take years, especially if your budget is tight! However, it’s well worth it—you may avoid the hassle of paying private mortgage insurance (PMI), which can substantially add to your monthly housing payments. A sizeable downpayment can also lower your interest rate and reduce the size of your loan.¹

Decide how much house you need. This is a tough question to answer, but it’s crucial that both partners are united on this front. Otherwise, one partner might feel like a house doesn’t meet their needs. Sit down with your partner and discuss what exactly you desire out of your home. How many bedrooms will you need? Do you want a big yard or a small one? How close to work do you want to live? Hammer out the important details of what you want in a home before the shopping begins!

Decide on your budget. Knowing how much you can afford before shopping for a home will help narrow down the options. Typically, housing costs should account for no more than 30% of your budget. That includes your mortgage payment, repairs, HOA fees, and renovations. Spending more than 30% can endanger your financial wellness if your income ever decreases.

Buying a home can be an exciting time for couples. But it’s important to take the necessary steps before you start house hunting. Remember, you want your new home to be a source of joy, not financial stress! Do your homework, talk with your partner, and start saving!

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“Do you need to put 20 percent down on a house?,” Michele Lerner, HSH, Sep 2, 2018, https://www.hsh.com/first-time-homebuyer/down-payment-size.html

April 7, 2021

The Power of Living Benefits

The Power of Living Benefits

Preparing for the possibility of a critical medical illness or condition is probably not high on your list of fun things to do.

But its importance cannot be overstated—two-thirds of people who file for bankruptcy do so because of medical debt.¹

What many don’t know, however, is that life insurance can help you shoulder the high cost of medical care… if you utilize living benefits!

How living benefits work <br> Almost all life insurance policies come with a death benefit. It’s money that will go to your beneficiaries when you pass away. A living benefit is a feature of some life insurance policies that allows you to access the death benefit while you’re still alive.

So let’s say you have a life insurance policy with a $400,000 death benefit. You suddenly get diagnosed with a serious illness that requires you to take time off work and undergo intensive medical treatment.

That means you’re facing a substantial expense with a decreased income. Your medical crisis has also become a financial crisis!

But what if you could access your death benefit in the present? $400,000 may cover a substantial portion—perhaps even all—of the cost of treatment.

And you don’t have to use your entire benefit. If your medical bills add up to $100,000, you could use $100,000 from your life insurance policy to cover your expenses, and leave the remaining $300,000 as the death benefit!

Keep in mind that only certain types of illness may trigger your ability to access your benefit. That’s why it’s important to work with a licensed and qualified financial professional to create the right policy for you.

If you’re interested in what living benefits would look like for you, contact me. We can review your income and how much life insurance your family needs!

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¹ “This is the real reason most Americans file for bankruptcy,” Lorie Konish, CNBC, Feb 11 2019, https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

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